Increase in BTC Trading Volume at Silvergate Bank

Silvergate Bank has recorded a 75% increase in Bitcoin trading and transaction volume in the first quarter of 2020. The crypto-friendly bank filed a transcript on its first quarter (Q1) earnings on 29th April with the US SEC (Securities and Exchange Commission).

The transcript showed that compared to the previous quarter, the trading volume of Bitcoin on SEN (Silvergate Exchange Network) has increased by 75%. The transaction volume of BTC has also increased by 118%. There have been 31,405 transactions in Q1 of 2020, while the previous quarter recorded 14,400 transactions. And compared to just 7,097 transactions in Q1 of 2019, we can safely see a steady increase in BTC trading on SEN.

Increase in Clients

Silvergate Bank has 850 crypto clients according to their count in April 2020. The bank had 617 clients at the end of March 2019 (a year ago), which grew to 804 clients by the end of Q4 last year. The bank mentioned that it has about 200 more potential clients in the pipeline.

The clients of this California-based bank include miners, crypto exchanges, custodians, and global investors. Major crypto exchanges such as Coinbase and Kraken are also the clients of this bank.

While a good number of crypto holders ended up with negative returns, Silvergate seems to have more than survived. It has reported a ‘fairly significant increase’ in the deposits following the downturn on March 12th. There have been $447 million BTC deposits, and compared to the rest of Q1, the overall position of Silvergate Bank appears comfortable. The bank is in a position to handle the expansion of digital assets and volatility in the future.

The fees generated from digital currency transactions during Q1 of 2020 saw an increase of $1.7 million, which is 92% more than what it was in the first quarter of 2019.

Volatility and New Product Testing

The transcript mentioned that the bank is planning to launch SEN Leverage to allow clients to get US dollars loans collateralized by Bitcoin. The product would be using the SEN platform to process loans and repayments in real-time. The product would be active 24 hours a day and 7 days a week, allowing clients to use it anytime.

Silvergate Bank has already approved $12.5 million Bitcoin collateralized loans using the ‘rigorous underwriting standards’ which the bank has been successfully following for years. The project is said to be in the pilot phase and is expected to roll out into the market sometime in the second half of 2020.

The bank said that volatility in the market helped test the functioning of the exchange. It helped in assessing the monitoring methods, and the results were positive and encouraging.

More about Q1 Performance

Silvergate Bank as recorded at a net income of $4.4 million in Q1 of 2020 compared to $3.6 million in Q4 of 2019. However, the bank doesn’t want to speculate about how things would turn out in by the end of the second quarter, much less the year-end.